Dollars and Sense: Addressing the Problems Presented by Terrorist Financing

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Abstract: This study is an analysis of how terrorist organizations finance their operations, specifically through criminal activity. Financial models of terrorist organizations are the life of terrorist organizations and determine how successful groups are in executing terrorist attacks. The fact that terrorists are engaging in criminal activity presents a number of problems to the United States when establishing policy and counterterrorism efforts to combat terrorism. To what extent are these organizations relying on illicit activity as a method of funding and recruitment and what problems does that present to the United States when it comes to establishing policy and counterterrorism efforts to terrorism? This study reviews otherwise legal and illicit ways that terrorist organizations fund their operations to see which methods are most beneficial and more useful to their operations. Analysis of Al Qaeda, Hezbollah, and Hamas and their engagement in criminal activities as a main source of funding show that terrorist organizations rely heavily and mostly on illicit activities for the majority of their funding and sustainability. U.S. policy that encourages a U.S. whole of government approach is necessary to tackle terrorist financing.
U.S. policy has established that tracking terrorist finances is a priority for the United States Government (USG), but the different roles and opinions of U.S. government agencies and resources available to them are obstacles that the USG must overcome to fight terrorist financing. Luke-warm U.S. policies with minimal guidance to certain agencies does not help the U.S. Government work closely together to address organizational differences and form a strong approach when implementing counterterrorism efforts. Further analysis suggests that policymakers and leaders of agencies within the USG should work together to address these issues. This study provides an in-depth assessment of current obstacles the United States faces as a result of criminally financed terrorism, while also articulating how the USG can address gaps between policy in theory and operational realities that prevent a true whole of government
approach to combating terrorist financing.
Readers: Dr. Rameez Abbas and Dr. Ken Masugi